According to research by SunLife, 33% of women in the UK over the age of 50 have no private pension. There are many complex reasons for this, but one glaring barrier to starting a pension stands out when you suggest to women they invest: pension analysis paralysis. 

When you think about pensions there are so many decision you need to make:

• When do you want to retire?
• How much money will you need to live on?
• When is the best time to start a pension?
• Which pension provider should you go with?
• How much money should you pay into your pension every month?

Given the seeming complexity of making the ‘simple’ decision of starting a pension, and the number of complex pension terms you need to know, it is no surprise that so many women have put it off. But that delay (or even failure to ever start their own pension) can have expensive consequences. 

Let’s explore the reasons why we hate making decisions, and how to overcome them. 

What is analysis paralysis?

Whenever we are faced with a decision with multiple choices, we can find ourselves stuck in something called analysis paralysis. This is an inability to make a choice due to over-thinking, information overload, and fear of making a mistake. 

Human beings’ brains are hard wired to hate being wrong, which makes decision-making when there is no clear ‘right’ answer problematic. This is why often delay making a firm choice, hoping that by putting it off the scenario will magically resolve itself – either we won’t need to make the decision, or more information will come to light that will help us make the right choice. And the more we have to lose from making the wrong choice, the harder it is to confirm a choice.

This makes starting a pension a particularly problematic decision. As we’ve already covered above, there are many questions you need to answer when deciding, so a lot of information to process. To complicate this, finance isn’t a subject many people are overly experienced in. And given your pension could impact your financial security for the rest of your life, the consequences of making the wrong decision feel enormous.   

So it’s easier to see why it’s attractive to put making the choice off. 

The cost of analysis paralysis when it comes to starting a pension

The problem with delaying starting your pension is that, with every passing month of inactivity, you risk losing money. 

Not only are you potentially missing out on investment growth/compound interest, but you might also be losing the tax benefits and employer contributions that are available in the UK – these amount to what is almost ‘free’ money. 

You also risk invoking sunk cost fallacy. As you’ve already lost opportunities to invest in a pension in the past, by taking action now you need to accept what you have lost. It can feel much easier to stick your head in the sand and ignore the issue completely. 

So just how much are you risking by not starting a pension? According to the TUC, women in the UK live on an average of £7,600 a year less than men. And given that, according to Retirement Living Standards, the full State Pension is not enough to live on if you are single, and only offers you a basic standard of living if you are in a couple, this can mean a tough retirement. 

How to overcome analysis paralysis and start a pension

So what can you do to help prepare for a more comfortable retirement? The first step is to overcome any analysis paralysis that may be preventing you from taking action. And to make this easier, I have answered some of the biggest questions and considerations that may be overwhelming you. 

How do you find a pension provider?

You can read advice here on choosing a pension provider. And Investing Insiders rank some of the best UK providers here.

You might also want to speak to an independent financial advisor for guidance. 

When do you want to retire?

The answer to this question may depend on a few things: your health, your ability/desire to keep working, what age your partner retires, and your financial situation. You don’t need to know the answer to this to start investing in a pension. My recommendation would be to get a pension going and consider this question later. 

How much money will you need to live on?

This is an important fact to know, and to help you we’ve created a free retirement gap calculator. Please don’t be put off if you discover you have a big gap to fill! Anything you do now can help make life easier for you when you retire. 

When is the best time to start a pension?

The best time to start a pension for us all was years before! And the second best time is today. So, again, please don’t worry if you feel you have left it too late – I did too. But once I started investing in a pension it motivated me to catch up. Even if you can only invest a very small amount now, it’s much better than doing nothing. 

Which pension provider should you go with?

This can be the most confusing – and paralysing – decision to make. So I recommend simplifying it. You can read advice here on choosing a pension provider. And Investing Insiders rank some of the best UK providers here. Don’t overthink this choice right now; just pick a provider and start. Later on you can always change provider if you don’t like who you are with. Just pick a company and get started. 

How much money should you pay into your pension every month?

My personal recommendation for this is as much as you can afford, especially if you are starting late or need to catch up. But don’t worry if you can’t afford much – even a modest amount invested regularly can add up and make your retirement more comfortable. Just check out this free compound interest calculator to see how your money could grow. 

Take action today and start saving for your future

If you don’t yet have a personal pension, I hope this article has helped you perhaps understand why that may be, and given you some practical steps you can take now to overcome analysis paralysis. 

Hannah Martin is the founder of Rich Retiree and an expert in female retirement.